tv Bloomberg Surveillance Bloomberg November 8, 2021 6:00am-7:00am EST
inflation is the risk for markets. >> it is painfully slow. >> they are not getting buoyed by inflation risk. >> for growth in the u.s. and globally is huge. announcer: this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: from new york city for our audience worldwide good morning, good morning. this is "bloomberg surveillance." your equity market up on the s&p 500. seven days of gains. lisa: it comes on the back of good data with respect to the market. the market getting to lofty places and fueled by low rates that went lower. that is the big mystery.
jonathan: what did you make of that? lisa: it doesn't make sense to me. what i read and a lot of the notes doesn't make sense to a lot of people and they blame technicals. i wonder if it is technical underpinning or people looking past people hearing something way more dovish from jerome powell than i did. jonathan: lisa will go through the fed speak for us. barry into the news flow friday pfizer coming out with something that could be a game changer. matt: i was talking about this story all weekend long. they came out with a pill that reduces hospitalizations and deaths by 89%. that is in the high risk unvaccinated cases. if this works, it is an absolute game changer.
it is essentially bringing the pandemic to an end if they can get it approved and get it out there. jonathan: the stock on friday up 10% and today up .7%. are we going to talk about the reopening trade back to normal for next year? lisa: we saw that with the reopening stocks getting a boost on friday. i am surprised there wasn't a bigger reaction. you get a pill that is a potential game changer. you speak with health officials and that is what they say. another reason i don't understand the bond reaction. jonathan: the seven day streak, was the equity market right all along to believe things would get better with this economy? matt: you saw huge gains on friday. today i was looking at iag and left tonsil with the pfizer news and the opening of the u.s. to foreign travelers -- and
lufthansa with pfizer news and the opening of the u.s. to foreign travelers. huge gains. the market predicted this. jonathan: when was the last time we did this together. matt: it's been a long time. i usually fill in for you when you are out but now it is for tom. jonathan: equity market up three on the s&p 500, advancing a little bit up 0.06%. the bond market, lease has questions, important questions with what is happening with the 10 year up three basis points. euro-dollar unchanged. crude at 1.55%. wti 82.53. lisa: the bond market always has questions for me. i am watching the chinese
communist party beginning there -- karen -- beginning their --. the idea they are having to pass it along and people are feeling it and how do they respond to that? we are going to hear six fed speakers and fed chair jay powell. how will they talk about the data we are getting tomorrow? as well as consumer prices expecting to increase at the fastest pace since 1990. how do they dovetail what they are seeing into when they could hike rates. at 1:00 p.m., 56 billion dollars of sales of three-year notes. we have 10 year tomorrow and 30 year on wednesday. a lighter week than in the past
because they are curtailing bond purchases. i am curious to see the demand ever so much volatility that is understandable from a fundamental standpoint. things seem to get better yet bond yields took a huge tumble. jonathan: we will pick up on that. tesla, -5.24% in early trading. matt miller, what is the take on what is going on? matt: it looks like elon musk wanted to get public permission to cash out a little bit of his holdings. he framed it as a political debate, disprove billionaires somehow evade taxes with unrealized gains. i think what he wanted to do was soften the blow it he needs to raise cash. all of the money he spends on the day by day basis is borrowing against his stake and he has some stuff that he wants to spend actual money on.
this is an easy way to prepare orchids. 5% drop is not too bad -- this is an easy way to prepare. a 5% drop is not too bad. i follow elon musk and some of the trolling he has done, is unbelievable. the guy has cojones. jonathan: we start with the chief investment strategist at oppenheimer. great to catch up. we have it in the in washington. the data in america, payrolls report, foreign equity market bowl, are you feeling good? john: i am feeling good about it. last week was celebration of all of the above.
beyond that, this week you will get a little bit of testing and some people take short-term profits. the direction looks up from here to the end of the year. fundamentals are good. we are where we should be based on all that has happened. lisa: what about when people are talking about how it gets trickier with potentially red -- rate hikes john --? -- rate hikes? john: it has a period next year when the fed will be tapering and then after that they will worry about where to take the funds rate. when we look at it from our perspective, the fed is very different fed than it was under
arthur burns. this is highly transparent and highly communicative. it telegraphs, moves, and the market denies with the fed sees or the market players do at their own expense. the fed is your friend during this period and has been a friend to main street and wall street. matt: even with friends like the fed, can we do better than a 29% gain year to date on the s&p? it is up with the greatest gains of all time. john: everyone forgets the s&p 600, the small-cap and the russell 2000 has actually been beating the s&p 500 this year. we have to think, this is all about talks about earnings season. the reality, a softer or lower
hurdle than we have ever seen for earnings and that says on a comparative asis, but -- comparative basis, but things are getting better. this is remarkable. jonathan: people are talking about a real acceleration of the economy and the return of the reopening trade back into small caps, etc. what advice are you giving to clients? john: we have been saying for a few years it is either cap agnostic. we spread the chips across the table when it comes to large-cap , small-cap, mid-caps. we also right now are growth and value, relatively reasonable price in growth and value, you can still get yield better than
the 10 year with the potential for capital appreciation. jonathan: always good to catch up with you. john stoltzfus. thank you very much. the s&p 500 up by 25% this year. go back to 2013. there is a flavor of 2013, a reminder that we were worried about monetary policy tightening , at the end of the year up by 30%. matt: that followed a year that was up 13% in 2012, a couple of fantastic years. 2019, we were up 29% 2020 we were up 16%, 17%. now we are of another 25%, 26%. there can't be too much of a good thing in this case, but i don't know how much longer we can continue at this breakneck pace. jonathan: can we continue that pace? we have taken out the year-end
price target. on the s&p 500, they see 4% upside by the end of 2022. with the forecast coming in and we start to get those out, it will be interesting to see a much upside these analysts, even if they are bullish. lisa: i love the growth value. it seems that people are searching for any kind of apple whatsoever they can get heading into next year. jonathan: equities unchanged this morning, positive three on the s&p 500 up by 0.06%. we will ask lisa's question about what reveals doing lower on friday? from new york city, for our audience worldwide, i am jonathan ferro with lisa abramowicz and with matthew miller in for tom keene, act tomorrow. -- back tomorrow.
ritika: president biden with a big economic victory with the passage of a bipartisan public works bill. now he wants to sell americans on the merits of more spending for fuel, food, and housing. he is set to tour for red and blue states and will make national television appearances. a ceo says companies reaching 2019 levels as the first flight takes off from london's heathrow airport. >> the numbers of sectors in 2019, by april 2022. ritika: three -- the reopening of the u.s. borders. growth exceeded analyst estimates for three months, reaching more than $84 billion
in october. it gained more than 27%. less than expected chinese economy with covid-19 outbreaks dragging on growth. honda became the latest automaker to comment on the chip shortage. they cut operating profit and now expects a profit. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. ♪
this in the house and in the senate. the build back better act will be a once in a generation investment in our people. >> we have to try to figure out how to make the case across the board, there are a lot of things to tackle. jonathan: success over the weekend for the president of the united states. good morning. your equity market positive three, advanced by 0.06%. five straight weeks of gains, seven straight weeks of gains on the s&p 500. yields higher by three basis points on tens at -- on tens. a firm foundation for high yields but abroad market for central banks with regard to inflation given the outcome of the bank of england meeting. it seemed everything was pegged toward the boe thursday. lisa: people are saying we are
pushing back rate hikes. there was nothing that jay powell said that indicated they would not raise rates next year. when people talk, there was a long position in two-year yields of hedge into that period that could have accelerated the rally. jonathan: the yields down seven basis points on friday, up three this morning. we need to head to washington, d.c. and catch up with our correspondent annmarie hordern. a big win for the president of the united states. annmarie: it has been the long-running joke when he said finally, infrastructure. they were able to get it over the finish line but not without its issues in the democratic party. the only reason they were able to get it over was to get the moderates and progressives coming to an agreement where the
moderate said by november 15, once we have the congressional budget office scoring fiscally paid for, we will vote to move forward build back better. six progressives known as the squad voted against this in protest of what went on and this got over the finish line because of republican votes. this is how they were able to get the hard infrastructure. next up will be a much harder fight for the larger social spending plan. jonathan: this president has done something former president could not do. can the president see this reflected in the polls? when you see what the congresswoman said, she tweeted, never good when you follow them up but this is wrong and we did not fund the replacement of every child's pipe.
this is about clean drinking water. there is still division there. annmarie: she is pointing to the fact that this has a lot of money or clean drinking water but will not solve every dirty pipe in the nation. but if you were to pass build back better, the largest plan, you would. that is why she is a hold out and she is having a moment with the president of the united states with this historic moment. this is the biggest infrastructure legislation we have had. it is something the president said he wanted to do but was not able to do. can they relish in this win or will their own infighting really going to paint a cloud over this. this is a lot of the opinion pieces. one top democrat pointed to it as we ran on a race that we are going to offer the american people something by than division and rancor and what did
we give them? rancor and division. lisa: we offered something else, division and rancor. heading intended midterms you wonder if there will be momentum . what is the next win for them? is there some additional measure that could get them back on the rails and a feeling of progress? annmarie: the president is going to take this win. even starting this week he is going to baltimore, maryland to the port to talk about the infrastructure and where the money could meet used. he will point to the courts, potholes, broadband. congress when they come back is going to be about can they get this deal through? you only got the first piece of legislation of your plan through
because of the 13 republican votes. yet the slimmest of majorities to get this through, can they do that? that will be the question. potentially before thanksgiving or christmas. if you start looking at the calendar, this comes right up to the december 3 debt ceiling deadline as well as stopgap funding. lisa: we expect one thing from the biden administration on the strategic control him release. they could get rid of some of the price pressure you have seen upwards in oil prices. how realistic is this? what pushback are they facing? annmarie: jennifer granholm, the u.s. secretary, said they would look at the data before tapping them. i asked the president when will we get a response giving that
opec-plus, he said he wasn't anticipating them to pump more. not enough for most consumers, but he said talking to other countries. potentially if the u.s. is going to tap, they would want to do it alongside big consumers like india and japan. the problem with tapping is the u.s. does this and great times of crisis. the last time we did it was during hurricane katrina. this is the big thing with the higher prices where most analysts see oil prices higher, where they are an even closer to a hundred dollars a barrel likely. jonathan: a big win for this president down in washington, d.c. negotiations still to be gun -- still to be done.
matt: i think for our viewers, for wall street, probably the most important issue is the state and local tax deductions, salt cap at $10,000 put into place by president trump. some in congress wanted to raise it to $80,000, but you have the progressives like aoc and bernie sanders. maybe they will limit it to those of income less than 400,000. if you live in new jersey, new york, connecticut and you are looking at taxes of 30% -- $30,000, 40 thousand dollars, $50,000 a year, much different if you live in vermont or florida. it is an issue the northeast cares about. jonathan: how is the house search going? matt: it is going.
jonathan: seven days of gains into monday. we had some weight to those gains, zero point 07% on the s&p 500. -- zero point 07% on the s&p 500. -- 0.07% on the s&p 500. when you think about the outlook year ago, they were bullish. it sounded crazy, and here we are paring year-end here, for percent upside on the s&p 500. muted gains are the theme for the outlooks.
let's get to the individual names talking about the airlines . american airlines up by 1%. united up by 1%. today an important date. if you are vaccinated you can travel to america. borders reopening for the vaccinated. the pfizer pill, the news that dropped on friday, got buried in the news and payrolls news and wall street. that could open the door for these two pick once more. matt: it is an absolute game changer. if it works as advertised and lowers hospitalizations and deaths in unvaccinated, high-risk patients, then it effectively ends the pandemic. aaron rodgers could take pill
instead of ivermectin and would be fine to play. i just don't understand. lying about being vaccinated first and taking a d warmer to fight a virus. it doesn't make a lot of sense. joe rogan did the same thing. jonathan: joe roman pointed out that it is also used -- joe rogan pointed out it is also used in humans. this is personal for me. to the bond market, that is personal for lisa. it confused a lot of people on friday. the labor market report, wages looked ok, the participation rate not going anywhere. some people were trying to explain away the move. lisa: i do not want to give a narrative to this move.
i think we have to see more. what i am going to ask every economist is if this makes sense. what is your sense of it? jonathan: it is one day of price action. we had three big central bank decisions last week. i would run away with a narrative. lisa: there is no clean, neat narrative. a birdseye view on the united states and europe and china and i want to get to china. a chief economist at the milken institute. i want your sense of the moves we saw in the bond market. people pricing in rate hikes and frankly going in the other way. in some places it made sense, in others not so much. does this mean it will be slower growth? >> the one thing that came out of the conference's portfolio managers have a different view of inflation. the portfolio managers and bond
managers were obsessed with prices going higher. economists are still toeing the fed line that says we have persistent influences keeping prices high. one of those influences is we have bottlenecks slowing down growth. how much will growth slowed down how much of the future is being priced in on the slowdown side and how much is the persistent high price. that is where you see the tension. william: this is stemming from what happens in china with the annual meeting. i am wondering the price increases there, how much does this indicate a protracted increase in prices around the world that people are not accounting for, deglobalization and change regime in china filtering into prices and slower growth globally. william: china is being hit by
domestic and global factors. the one thing we see which is a most a microcosm of what we see locally is that a rise of 10%, consumer prices projected to go up to 1.4%. that is where you see authoritarian control being able to manage retail prices at the expense of profits paid one of the things they are banking on is that xi jinping's leadership will produce enough productivity gains to be able to keep the margins up and keep chinese companies profitable. jonathan: is that lifelong leadership a growing risk for this economy? william: everyone is looking toward the sense of how is it that xi jinping is going to be able to pull off and creating for everyone and focus
innovation on domestic sources of growth and domestic sources for export and keep it done in a way that allows the rest of the world to be a part of china's growth. the leadership is something they will come out with and say the one that we have to keep in mind is that xi jinping, is the one who has made china strong and allows them to stand up among the league of nation among equals. that is the historical review that will come of this meeting justifying that we need xi jinping's leadership. the sacrifice will be focusing on domestic growth and sacrificing innovation and doing it in a way that reserves the communist party's power. jonathan: what about domestically? how strong is the power right now? leigh-ann: there are mixed -- william: there.
-- there are mixed reports. he is worried he is not going to get enough support to carry out his policies. it is not so much the top levels but useful government and state and local governments that have to implement the policies. there is tension caused by the energy crisis. the federal government sucks in the taxes but the state and local governments have to manage budgets. that tension between state and local governments and the federal government is something xi jinping has to manage between now and the time of the next national party congress. he has to have a unanimous call for him to stay in power. matt: do we see a slowdown in growth that becomes a problem for the global economy in china? william: yeah, because right now
they are suffering an energy crisis. the notion of having common prosperity has focused chinese policy on the internet companies and hitting on education which is something they have been trying to use to bootstrap themselves to increase capital. managing these policies we in the west don't have to worry about. it is only that western investment will help china be manufacturing conduits for the rest of the world. in a competing visit -- business with china on that you are in trouble. matt: longer-term, does this have the potential to cement his legacy as one of the most successful leaders?
can he really achieve common prosperity? william: we know the model city for silicon valley. it has become successful because it copied hong kong's model. xi jinping says you should innovate with an eye toward the needs of the center. they are managing innovation and the directions in which these companies have to focus their growth. it is a dangerous game and it may or may not work. most industrial policies fail. jonathan: it is good to catch up, william we. very few -- william lee. lisa: a lot of debate with hong kong saying, let us lighten up. we are doing the best we can but we are getting pushback and not wanting to have headquarters here.
how much can they pursue zero covid for something that isn't going away? they are never going to achieve zero covid if they want to open borders. jonathan: this has huge consequences for the supply chain. a record trade surplus out of china. lisa: the idea is how much of a boost do they get from this versus how much decline do they get from people wary of doing business if workers are told to stay home because one person. covid. jonathan: on economy and politics and china has been tricky all year. matt: it is always tricky, because you are not ever 100% sure of the numbers that you do get a for example, with zero covid, we don't know what the covid situation is like there. there could be bigger out books -- outbreaks that have not been publicized. if they close a port for just one infection, do you believe
that or are they closing it because they are having a big outbreak? we won't know the truth. jonathan: data integrity has been a problem for a long time. has that not changed at all? matt: i don't think it has changed, at least in my 20 years as a journalist covering the global economy and china. i think the expense we had out of wuhan shows there is still a lot of opaqueness. jonathan: if it is bad and it must be really bad. lisa: let's be honest. not that bearish. their tolerance is lower than ours. jonathan: equities up. getting your trading week started here on "bloomberg surveillance." ritika: president biden facing
pressure to decide how to address a surging gasoline prices. officials looking at new died a as a guidepost -- officials looking at new data as a guidepost. prediction increasing to me elevating demand. the reopening of travel to the u.s. from europe. worries about fuel. >> it is one of our main markets. we needed to have that capacity in the air. i think we are going to see the future we can fly and it is important. ritika: he expects increase
and they need to place orders. we are looking so that everyone will get it in a fair way. jonathan: the pfizer ceo. from new york city, good morning. equity market up.1%. i want to check out the stock at pfizer in the premarket come up more than 10%. this morning up .7%. lisa: it is surprising there was a bigger reaction considering the fact that a lot of people saying it is a game changer. if you can stay out of the hospital, that takes away the concern of overwhelming health sources. jonathan: they say it reduced hospitalizations and deaths by 89%. let's talk about it now.
i am sure you have had a look at the data, what did you learn? doctor: the fda will review it and if it is authorized, which is a fair bet, then we will see how it performs in the real world. it does have to be given in the first few days of illness. it is similar in that sense to monoclonal antibodies which are very effective but many people can't get to them in time. lisa: how much our drugstores, pharmacies, first responders if they could test and distribute these drugs in short order rather than waiting to get a prescription?
dr. sharfstein: as we understand the data, that may be the approach to take. it is not too hard with doctors to try to get in touch with them and get a prescription but a lot of people don't have doctors. it would make sense for there to be rapid approaches, standing orders, pharmacy prescribing. but one step at a time. lisa: this is one notch on the reopening moment that we seem to be in. there are people talking about a fourth or fifth wave but it is diminished and you are seeing travel reopen with the u.s. and the united kingdom. how much does this indicate a reopening versus introducing danger? was there a reason for this to be closed for as long as it was from a virologist point of view? dr. sharfstein: from a public health point of view, some of
the travel restrictions haven't made a lot of sense, because there has been so much virus inside the united states, so restrictions such as restrictions at the border have always been a puzzler. the real challenge has been within the border and controlling things and we still have 75,000 infections a day. i think we are moving back towards the new normal but it will not be the same as 2019, but it will feel a lot more like we have our lives back. matt: does this reduce the urgency to vaccinate the remaining population? dr. sharfstein: here is one of the big challenges. the same population of people in many places who are reluctant to get vaccinated may be reluctant to go and get tested for covid and find out they need the pill until it's too late. so the best thing by far is to get vaccinated.
the other thing to keep in mind is that viruses can adapt and escape from the antiviral treatment. so what looks good in one trial now may not look good as it mutates. i think i would not take my foot of the accelerator for vaccinations. matt: speaking of mutations, lisa made a great point earlier that we are never going to be at a zero covid again, but when we had the spanish flu, that eventually mutated into the flu that we all got before the lockdowns here. is this going to mutate into something much easier to live with? dr. sharfstein: we certainly hope so. there are some theories that some of the pandemics in the late 19th centuries were actually coronavirus that turned into the common cold we have today. we are not going to know what
happens for a number of years. in the meantime, we should do what we can to protect ourselves. jonathan: good to catch up. i need to talk about numbers out of ubs, price targets for the s&p 500. targeting 4650, downside from where we were on the closing level of 1%. this into the price targets going forward. 4850 by year-end 2022, 5k by the end of 2023, not much upside. into 2023 year end, they see 6.4% upside from where we were friday. for financial conditions, slowing growth in the second half of 2022, flattening of eps growth to below trend levels and more notable derating in the back half of next year. it seems to me the inflation point seems to be the back half
of next year. lisa: you do have a withdraw of monetary policy. will it affect the market in any material way going into next year? a lot of people say no. if you get a slowdown in growth you get back to a slow growth environment. when do we see that there is no alternative trait? jonathan: a little bit of downside into your and. 4850 year-end 2022, 5k year-end 2023 over at ubs. matt: i also think monetary policy, who cares? now that we have fiscal stimulus that is $5 trillion $10 trillion a year, does monetary policy matter as much as it used to? lisa: what are you talking about with fiscal stimulus? matt: if we keep getting at the likes of which we had before during the pandemic and now they
want to pass after the $550 billion, they want to pass more really be a $420 bill. lisa: i hear what you're saying. john, you have been talking about this that it took the oxygen out of the room for the other initiatives. there is a question of more hawkish in us on the fiscal side -- hawkishness on the physical side. jonathan: look at the treasury announcement. goldman sachs came out a number of months ago and talked about a return to 1.5% to to percent. i have no -- 22% -- to 2%. lisa: i wonder how much it
>> the markets are pricing in inflation, which is going to be with us for some time. >> we are moving towards inflation is the risk for markets. >> we are in the process of normalization, but it is painfully slow. >> inflation risk seems to be persisting for much longer than anyone forecasted. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: getting your trading week started this morning. from new york city, for our audience worldwide, could morning. this is "bloomberg surveillance, " live on tv and radio. your equity market advancing about 0.1%. this feel that came out of last week continues. lisa: progrowth, yet you are not seeing it in the bond market. we have been talking all morning, how much are we